I love the concept of disproportionate rewards–getting the biggest rewards, for the least effort.
You can use an app like iBotta to save money on groceries and in a year’s time save a few hundred dollars. While saving money this way is easy, it’s not like the benefits will change your life.
Compare this to optimizing your 401(k). A few hours of research and moving your account can knock years off your working life. The rewards for the effort here are disproportionate.
What personal finance actions have disproportionate rewards?
Here are 15 of my favorite.
15 Smart Personal Finance Actions
# 1 – Increase Your Credit Score
You should know your credit score. A few years back, a medical bill of mine was sent to the wrong address. I didn’t find out about it until I got an alert that a collection agency showed up on my credit report. I ended up getting it fixed but if I didn’t have credit monitoring setup, the situation could have been far worse.
I now use a free website called Credit Sesame to get free credit alerts, see my score, and details of my credit report.
What’s nice about Credit Sesame is that it gives you customizable tips for increasing your score.
Why is this a big win?
A good credit score can save you thousands over your life.
# 2) Earn Up To 20% Cash Back For Shopping Online
I kick myself for not knowing this tip earlier. Did you know you can make money when shopping online?
All it takes is a few seconds of your time.
Here’s how it works…
Many websites give you cash back for buying things from online stores such as Amazon. What these sites do is share the affiliate commission they earn. For example, eBates one of the largest cash back sites, splits the affiliate commission with you 50/50.
Besides eBates I also use Swagbucks. Swagbucks allows you to earn anywhere from 1 to 20% cash back. While you can’t use eBates and Swagbucks at the same time, there are times when one has a higher reward than the other. So I check both before making a purchase on a site like Amazon.
Sign up for both of them (to earn $15 in bonus cash) and see how much cash you’ll get back on your next online purchase.
# 3 – Let A Robot Save You Money
I’ve talked a bit about Trim because they keep sending me Facebook Messages about how they saved me money, including this recent one:
The goal of Trim is to become your automated personal finance assistant.
Trim works inside of Facebook messenger. You start by downloading the app. Then, syncing your credit card data.
Trim’s goal is to find you customized coupons, promos, and rebates. When they do, they send you a message on Facebook. As it really involves no effort on my part, I’ve really enjoyed the savings so far.
#4) Refinancing Debt
As interest rates are starting to rise, locking in a low rate on any debt such as credit cards, car, student loans, or mortgage can save you thousands.
Head over to Credible, which lets you search rates for both student and personal loans.
Credible can refinance student loans with rates currently as low as 2.93% variable and 4.70% fixed APR. The average savings of one of their customers who refinance their student loans is $18,668!
Credible also offers rates as low as 5.99% for refinancing your credit card debt or other personal debt.
There’s no service fees, no prepayment fees, and no origination fees.
#5) Uncover Your Hidden Fees
Did you know that hidden investment fees can account for one of the largest expenses over your life?
For example, take a young investor with $25,000 in a retirement account, who plans to add $10,000 each year, with expected earnings of 7% over 40 years.
If this young investor pays 1% in fees each year, the total cost to this investor would be $592,798.
Remember, fees not only cost you money today, they reduce your returns in the future.
It’s important to discover each and every cent you’re paying in investment fees. Minimizing investment fees can take years off your working life.
Unfortunately, they’re called hidden fees for a reason. They can be hard to uncover.
The good news is there is a free financial tool that helps you discover all the hidden fees you’re paying today.
Enter Personal Capital’s Free Fee Analyzer. You just sign up at no cost and sync your investment accounts. Then, Personal Capital allows you to see the impact of hidden fees on your savings.
# 6) Get Money Back Today
Ever bought something, which the price dropped shortly after? Now, you can easily get refunded the difference.
Paribus is a website and app that automatically tracks purchases from select merchants. When a price drops, Paribus will then automatically refund you the difference.
Stores include Amazon, Target, WalMart, Costco, Old-Navy and more.
This is a real no-brainer, as all it takes is signing up once for free. Then, the app takes care of the rest.
#7) Shop For Home & Auto Insurance & Start Saving!
One of the simplest personal finance actions is to shop your home and auto insurance. Rates can vary from carrier to carrier 50% or more. To save time check rates on Insurify.
Insurify is a new startup from a team of experts at MIT and TripAdvisor. Insurify does an excellent job of bringing the same hotel shopping experience–where you can compare prices in a matter of seconds–to auto insurance. You fill out one form on your computer or phone. Then, find out exactly how much you can save in under 2 minutes.
# 8) Give Your 401(k) an Audit
Have a 401(k)? If you’re like most you decided on your choice of funds a while back and haven’t given it much thought since.
Sorting through the sometimes complex options in your 401(K) can seem daunting. An easier alternative is to have a robo-advisor give you a free audit.
Bloom is a 401(k) robo-advisor that analyzes your 401(k) in a totally hands off way.
All you do is link up your retirement account–then get a free analysis of your 401(k) in minutes.
You can take this free analysis and make adjustments yourself. If you prefer a hands off approach, Bloom can manage your 401(k) for $10 a month, with your first month free.
A 401(k) is often a large percentage of your net worth. It’s important to get it right.
Start the signup process by entering your name, birthday, and estimated retirement date. Then, let Bloom link up to your retirement account to get your free analysis.
# 9) Switching To A Low Fee, High Interest Bank
If you’re constantly getting dinged fees, whether ATM, overdraft, or made up which banks tend to do, switch banks. I use and enjoy : It’s a no-fee checking and savings, with some of the highest interest rates you’ll find. My favorite feature is that you’re able to setup multiple savings accounts to save for different goals.
# 10) Make a Strategic Career Move
If you spend 100 hours looking for a job (most people spend much less) and are able to get a $10,000 annual raise, your time was worth $100 an hour. Potentially much more if you account for future raises.
This makes finding a higher paying job a very rewarding activity.
Start strategically thinking about your career. I recommend the book The Start-up of You: Adapt to the Future, Invest in Yourself, and Transform Your Career.
#11) Automate Your Finances
One of the most time saving, both in terms of time and money, personal finance actions is to automate your finances. You save hours each month by automating your finances and potentially hundreds each year in late fees.
Setup your credit cards or any bills to autopay. Review your 401(k) contributions (can you add more or should you switch to Roth?). Setup automatic IRA withdrawals.
#12) Reading Your Benefit Packet
If you get your health insurance through an employer, sit down and read through your entire employee benefit packet.
Yes, it will take an hour or so. However, if you’re like most, you’ll find ways to save you’re not taking advantage of. This can come in the form of discounted dental visits, no-cost life or disability insurance, and a FSA to reduce medical expenses.
# 13) Learn to Negotiate
Negotiating is a skill with disproportionate rewards.
Consider the ROI on spending an hour learning the basics of negotiation for a home purchase or negotiating a raise (You can and should spend more time, however, since most people don’t spend any time here, even an hour of prep makes a big difference).
Beyond asking for a raise and in home transactions, negotiation is a valuable career skill. Since few people take the time to understand negotiation, it’s extremely valuable.
Some of my favorite books on the subject are:
- Getting to Yes: Negotiating Agreement Without Giving In – by Roger Fisher
- Never Split the Difference: Negotiating As If Your Life Depended On It – by Chris Voss & Tahl Raz
# 14) Pay Off Your Debt With Cash On Hand
If you can pay off high interest debt with cash in your bank account, go for it. Without the interest payment, you can quickly build up an emergency fund to where it is now and save hundreds or even thousands in interest.
# 15) Setting Financial Goals With Your Spouse
Money is the leading cause of stress in marriages. Often it’s because the lack of communication and shared vision.
My best advice for communicating with your spouse when you’re not on the same page is don’t bring up past mistakes. Instead, set a vision of where you want to go in the future based on what’s important to each of you. Then, determine what you both need to change to get there.
I’ve written a financial goal setting workbook, to help guide both individuals and couples for setting a vision. It’s a step-by-step process for gaining clarity in your financial life. Sign up below for free access.
HOW TO SET FINANCIAL GOALS
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